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Weaker Swiss franc gives Swatch Group a leg up

Zurich — Swatch Group had enjoyed a strong start to 2018 and is cheered by the recent weakening of the Swiss franc, CE Nick Hayek said.

"We saw an end of the year that was very strong — double-digit growth — and now it continues, so every month is a record month for us," he told CNBC in an interview broadcast on Tuesday, adding that the Swiss franc was helping as the Swiss watch maker comes back to levels of about last seen three or four years ago.

Swatch — which makes watches under the Longines, Tissot and Omega brands as well as the eponymous plastic watches — had been one of the Swiss manufacturers struggling with the strong franc, which made production in Switzerland more expensive. The franc has lost 2% versus the euro in 2018 and fell last week to its weakest level in three years.

Hayek’s bullish outlook came as the Swiss watch industry reported March exports rose 4.8% compared with a year earlier. First-quarter watch exports rose 10.1%, the highest quarterly growth rate since mid-2012, figures from the Federation of the Swiss Watch Industry show.

Expensive watches

The sector has been in recovery mode after a tough few years marked by a corruption crackdown in China, which suppressed demand for expensive watches.

Hayek said he saw growth in many markets and was upbeat about sales in China.

"We have growth everywhere, from local consumers in the United Kingdom, in the United States, of course also in China," Hayek said.

President Xi Jinping’s corruption crackdown had had an impact, Hayek said, but that was over.

"It’s true that some people didn’t want to show up with golden watches … because it was not what you should show yourself with. But this has normalised since a long time," he said.

Hayek said Apple’s smartwatch presented an opportunity because it meant people would continue to wear watches.

"When Apple decided to bring the Apple Watch, it was fantastic for us because nobody buys an Apple Watch to keep it all the time on the wrist. You change it," Hayek said.

"So this will make the market grow. And there is space for Apple, there’s space for others and there is of course a lot of space for us."